CEOs 'see no growth' in 2013; UK's AAA rating under threat; China's flagging future; Gangnam Style earns $8m for YouTube

1 Business leaders ‘see no growth’ in 2013 (BBC) More than half of chief executives in a new survey have predicted the global economy will continue on its current path of minimal growth in 2013. In PwC's annual global CEO survey, 52% predicted no change, 28% foresaw further decline and 18% expected an improvement. It is still an improvement from last year when 48% predicted a decline. The research came from interviews conducted with 1,330 chief executives in 68 countries. It was released at the start of the World Economic Forum in the Swiss ski resort of Davos. 

"Chief executives believe that we are in for another year with a global economy that is reluctant to recover," Dennis Nally, chief executive of PwC International, said at the launch. "Risks that were once viewed as improbable are now the norm." The business leaders were more upbeat about the growth of their own companies, with 36% of them very confident about growth prospects in 2013. 

 But that was down from 40% at the same time last year. They were also asked what issues worried them the most and top of the list was uncertainty about growth, which 81% of them cited.

2 UK’s AAA rating under threat (Phillip Inman in The Guardian) Britain's coveted AAA credit status came under renewed pressure after official figures pointed to higher than expected public sector debts last month. The government borrowed an extra £15.4bn in December, higher than forecast by most analysts and, with three months still to go, almost hitting the total forecast for the full financial year. 

Unless there is a large jump in tax receipts in January, credit ratings agencies are expected to take a pessimistic view of the UK's public finances and downgrade its credit status. James Knightley, an analyst at ING, said there was little to please the Treasury after borrowing figures of £15.2bn in December, against £14.8bn in the same period last year, according to the Office for National Statistics. Knightley said the UK's triple-A rating was under pressure and was likely to follow the US and France, which have already been downgraded.

"At first glance the cumulative budget deficit for the financial year to date appears to have shown a decent improvement this year – £78.5bn versus £99.3bn for the same period in full year 2011/12," he said. Knightley emphasised that the government's problems centred on a dearth of tax receipts rather than an explosion in spending.

3 China’s flagging future (Zhang Monan in Khaleej Times) China’s economy is at a crossroads. As 2013 begins, foreign and domestic observers alike are asking which path the country’s economic development should take in the next decade. How can China ensure stable and sustainable growth in the face of significant internal and external challenges, including slowing medium and long-term growth, rising labour costs, and growing inflationary pressure?

On average, China’s industrial enterprises are relatively small, and, although its industrial labour productivity (real manufacturing value added per employee) has improved over the last decade, it remains much lower than that of developed countries – just 4.4% of America’s and Japan’s productivity, and 5.6% of Germany’s. And the “pauperisation” phenomenon — in which companies must adjust their commercial strategies to cope with an impoverished consumer base — is increasingly affecting traditional industries, further undermining China’s capacity for sustainable development.

While manufacturing wages remain significantly lower in China than in the US, the rapidly narrowing gap is already fueling American reshoring. Given that Chinese wages are rising at an annual rate of 15-20%, productivity-adjusted wage rates in low-cost US states are expected to exceed those in some coastal regions of China by only 40% in 2015. Add to that reduced energy costs in the US, owing to the country’s shale-gas revolution, as well as the global supply chain’s complexity, and China’s cost advantages will soon be negligible. Although the enormous potential of China’s consumer market can provide a new impetus for economic growth, the country’s economic transformation cannot succeed unless it upgrades its manufacturing sector.

Only by combining growing Chinese consumption with enhanced Chinese manufacturing will the country be able to develop a new comparative advantage, which is the key to sustainable growth over the next decade.

4 Gangnam Style earns $8m for YouTube (Straits Times) Google said the YouTube page showcasing the Gangnam Style video by South Korean rapper Psy has reaped more than $8 million in ad revenue. Google Chief Business Officer Nikesh Arora revealed the figure while discussing the money-making potential of YouTube during a quarterly earnings call with financial analysts.

Ad revenue from popular YouTube videos is shared with creators of the content. In December, Gangnam Style became the first video to break a billion views on YouTube, marking a historic milestone on the Internet.